Jeffrey Allen Industries, L.L.C. v. Manco , 2014 Ohio 268 ( 2014 )

[Cite as Jeffrey Allen Industries, L.L.C. v. Manco, 2014-Ohio-268.]
COURT OF APPEALS
RICHLAND COUNTY, OHIO
FIFTH APPELLATE DISTRICT
JEFFREY ALLEN INDUSTRIES, LLC, : JUDGES:
ET AL., :
: Hon. John W. Wise, P.J.
Plaintiffs - Appellees : Hon. Patricia A. Delaney, J.
: Hon. Craig R. Baldwin, J.
-vs- :
:
RONALD J. MANCO, ET AL., : Case No. 13CA53
:
Defendants - Appellants :
:
and :
:
JOHN B. OFFENBURGER, : OPINION
Third Party Plaintiff-Appellant :
:
-vs- :
:
JEFFREY A. BENTON, :
Third Party Defendant-Appellee :
CHARACTER OF PROCEEDING: Appeal from the Richland County
Court of Common Pleas, Case No.
08-CV-1342
JUDGMENT: Affirmed in part and reversed and
remanded in part
DATE OF JUDGMENT: January 24, 2014
APPEARANCES:
For Defendant--Appellee For Plaintiff-Appellant
Jeffrey A. Benton John B. Offenburger
BENJAMIN D. KITZLER ROBERT A. FRANCO
Spaulding & Kitzler, L.L.C SHANNON G. BECKER
3 North Main Street, Suite 803 1007 Lexington Avenue
Mansfield, OH 44902 Mansfield, OH 44907
Richland County, Case No. 13CA53 2
Baldwin, J.
{¶1} Third-party plaintiff-appellant John Offenburger appeals from the May 17,
2013 Judgment Entry of the Richland County Court of Common Pleas granting the
Motion for New Trial filed by third-party defendant-appellee Jeffrey Benton.
STATEMENT OF THE FACTS AND CASE
{¶2} On or about March 16, 2007, an Asset Purchase Agreement was entered
into between appellant John Offenburger and Ronald Manco, as buyer, and Jeffrey
Allen Industries, LLC (“JAI”) and Stacy Trimble, who owned JAI and was then appellee
Benton’s girlfriend, as seller. Pursuant to the terms of the agreement, appellant and
Manco purchased the assets of a cabinet making business for $200,000.00. Paragraph
16 of the agreement stated, in relevant part, as follows:
{¶3} “Noncompetition. The Seller, Stacy L. Trimble and Jeffrey A. Benton,
personally, agree that, for a period of three (3) years from the date of Closing hereof,
they will not directly own, manage, operate, join, control, or participate in the ownership,
management, operation or control of or be connected with, in any manner, any cabinet
making business within a sixty (60) mile radius of Galion, Ohio, which shall be in
competition with the business of the Buyer…” The agreement was signed by Trimble as
owner of JAI and also individually as to paragraphs 6 (which concerned representation
and warranties of the seller) and 16 and by appellant and Manco. Appellee, who was a
key employee of JAI, signed in his individual capacity as to paragraphs 6 and 16.
{¶4} On March 26, 2007, contemporaneously with the closing in this matter,
appellant formed Stonybrook Cabinet Company, Inc.
Richland County, Case No. 13CA53 3
{¶5} On July 8, 2008, JAI filed a complaint against appellant John Offenburger,
Stonybrook Cabinet Co., Inc. and Ronald Manco. In its complaint, JAI asserted claims
for breach of contract, fraud, replevin and unjust enrichment. The claims all related to
the sale of JAI’s assets to appellant and Manco.
{¶6} On September 15, 2008, appellant John Offenburger and Stonybrook
Cabinet Co. filed a third party complaint against appellee Benton and Trimble, alleging
conversion, civil theft, and breach of the non-compete clause in the Asset Purchase
Agreement. In their Third Party Complaint, appellant and Stonybrook demanded
judgment against both appellee Benton and Trimble. On April 23, 2009, a Notice of
Suggestion of Death of Ronald Manco was filed. An amended third party complaint was
filed on August 30, 2011 that added Julius Homes, LLC as a third party defendant and
added a claim of tortious interference with contract.
{¶7} A jury trial was held in December of 2012 on the issue of whether or not
appellee had violated the non-compete clause contained in paragraph 16 of the Asset
Purchase Agreement. Appellee represented himself at trial and Trimble and Julius
Homes, LLC did not appear. The jury, on December 21, 2012 returned with a
$300,000.00 verdict in favor of appellant. As memorialized in a Journal Entry filed on
January 2, 2013, the trial court entered judgment in favor of appellant and against
appellee in the amount of $300,000.00 plus interest. The trial court, in a separate
Judgment Entry filed on the same day, entered judgment in favor of appellant and
against Trimble and Julius Homes, LLC.
{¶8} On January 4, 2013, appellee filed a Motion for Judgment Notwithstanding
the Verdict and Motion for a New Trial. Appellee, in his motion, alleged that he was
Richland County, Case No. 13CA53 4
entitled to a new trial pursuant to Ohio Civ.R. 59(A)(4) and (A)(6) because appellant
was awarded excessive damages that appeared to have been given under the influence
of passion or prejudice and because the judgment was not sustained by the weight of
the evidence. Appellant filed a memorandum in opposition to such motion on February
15, 2013.
{¶9} As memorialized in a Judgment Entry filed on May 17, 2013, the trial court
overruled appellee’s Motion for Judgment Notwithstanding the Verdict, but granted his
Motion for New Trial. The trial court, in its Judgment Entry, stated, in relevant part, as
follows: “Mr. Benton [appellee] filed his motions pro se and defended himself at trial. For
an untrained person he did a respectable job but his efforts fell well short of a lawyerly
performance. Mr. Offenburger [appellant], on the other hand, hired two young but well-
qualified attorneys,… Mr. Benton [appellee] in his humble request for the jury to treat
him fairly was simply no match for [appellant’s attorneys].” The trial court further stated
that while there was a “smattering of evidence” that appellee’s cabinet-making may
have cost appellant some customers, “there was no evidence that [appellant] was either
capable or willing to serve customers.” The trial court also found that there was “little
evidence” to justify the $300,000.00 in damages that the jury awarded to appellant.
{¶10} Appellant now appeals from the trial court’s May 17, 2013 Judgment
Entry, raising the following assignments of error on appeal:
{¶11} THE TRIAL COURT ABUSED ITS DISCRETION WHEN IT IMPROPERLY
GRANTED A NEW TRIAL ON THE BASIS OF GROUNDS NOT SPECIFIED IN ITS
ORDER, OR ON GROUNDS NOT LEGALLY RECOGNIZED BY LAW OR
SUPPORTED BY FACT.
Richland County, Case No. 13CA53 5
{¶12} INSOFAR AS IT MAY BE IMPLIED THAT THE TRIAL COURT GRANTED
A NEW TRIAL BASED ON THE GROUNDS THAT THE EVIDENCE WAS NOT
SUFFICIENT TO SUPPORT THE UNANIMOUS JURY VERDICT, IT WAS AN ABUSE
OF DISCRETION BECAUSE THE JURY VERDICT WAS SUPPORTED BY
COMPETENT CREDIBLE EVIDENCE ON EACH ELEMENT OF APPELLANT’S CLAIM
FOR BREACH OF CONTRACT.
{¶13} INSOFAR AS IT MAY BE IMPLIED THAT THE TRIAL COURT
GRANTED A NEW TRIAL BASED ON THE GROUNDS THAT THE DAMAGES WERE
EXCESSIVE OR TOO LARGE, IT WAS AN ABUSE OF DISCRETION BECAUSE THE
JURY VERDICT WAS SUPPORTED BY COMPETENT CREDIBLE EVIDENCE, AND
THERE WAS NO FINDING THAT THE AWARD WAS INFLUENCED BY PASSION OR
PREJUDICE.
{¶14} For purposes of judicial economy, and because all three assignments
relate to whether or not the trial court erred in granting the Motion for New Trial, we shall
address the assignments of error together.
I, II, III
{¶15} Appellant, in his three assignments of error, argues that the trial court
erred in granting appellee’s Motion for New Trial.
{¶16} Civ.R. 59(A) governs grounds for a new trial and states as follows: “A new
trial may be granted to all or any of the parties and on all or part of the issues upon any
of the following grounds:
Richland County, Case No. 13CA53 6
{¶17} “(1) Irregularity in the proceedings of the court, jury, magistrate, or
prevailing party, or any order of the court or magistrate, or abuse of discretion, by which
an aggrieved party was prevented from having a fair trial;
{¶18} “(2) Misconduct of the jury or prevailing party;
{¶19} “(3) Accident or surprise which ordinary prudence could not have guarded
against;
{¶20} “(4) Excessive or inadequate damages, appearing to have been given
under the influence of passion or prejudice;
{¶21} “(5) Error in the amount of recovery, whether too large or too small, when
the action is upon a contract or for the injury or detention of property;
{¶22} “(6) The judgment is not sustained by the weight of the evidence;
however, only one new trial may be granted on the weight of the evidence in the same
case;
{¶23} “(7) The judgment is contrary to law;
{¶24} “(8) Newly discovered evidence, material for the party applying, which with
reasonable diligence he could not have discovered and produced at trial;
{¶25} “(9) Error of law occurring at the trial and brought to the attention of the
trial court by the party making the application.
{¶26} “In addition to the above grounds, a new trial may also be granted in the
sound discretion of the court for good cause shown.”
{¶27} Depending on the basis of the motion for a new trial, we review the trial
court's decision under either a de novo or an abuse of discretion standard of review.
Rohde v. Farmer, 23 Ohio St.2d 82, 262 N.E.2d 685 (1970), paragraphs one and two of
Richland County, Case No. 13CA53 7
syllabus. “Where a trial court is authorized to grant a new trial for a reason which
requires the exercise of sound discretion, the order granting a new trial may be reversed
only upon a showing of abuse of discretion by the trial court.” Id. at paragraph one of
syllabus. However, “[w]here a new trial is granted by a trial court, for reasons which
involve no exercise of discretion but only a decision on a question of law, the order
granting a new trial may be reversed upon the basis of a showing that the decision was
erroneous as a matter of law.” Id. at paragraph two of syllabus. An abuse of discretion
implies that the court's attitude was “unreasonable, arbitrary, or unconscionable.”
Blakemore v. Blakemore, 5 Ohio St.3d 217, 450 N.E.2d 1140 (1983).
{¶28} While the trial court, in its May 17, 2013 Judgment Entry, did not specify
which subsection of Civ.R. 59 it was basing its judgment on, we note that appellee, in
his motion, only alleged that he was entitled to a new trial pursuant to Civ.R. 59(A)(4)
and (6). Appellee, in his brief, now maintains that a new trial was warranted under
Civ.R. 59(A)(6) and (7) because “there was no evidence [a]ppellee breached the non-
compete agreement. “ Appellee further contends that a new trial was warranted under
Civ.R. 59(A)(4) or (5) because the damages were excessive and/or without basis in
evidence.
{¶29} As is stated above, Civ.R. 59(A)(6) permits a trial court to grant a new trial
on the basis that the judgment is not sustained by the weight of the evidence. If the
verdict is supported by substantial competent, credible evidence, a trial court abuses its
discretion in granting a new trial based upon the weight of the evidence. Dillon v. Bundy,
72 Ohio App.3d 767, 773-774, 596 N.E.2d 500 (10th Dist. 1991).
Richland County, Case No. 13CA53 8
{¶30} A trial court's decision to grant a motion for a new trial based upon the
weight of the evidence will be overturned on appeal only where the trial court abused its
discretion in granting the motion. Rohde, supra, 23 Ohio St.2d at 90. A trial court may
not set aside a jury verdict upon the weight of the evidence based upon a mere
difference of opinion with the jury; doing so constitutes an abuse of discretion by the trial
court. Id. at 92. The jury's function is to weigh the evidence in the first instance, and a
trial court may not usurp that function. Id.
{¶31} The trial court, in its May 17, 2013 Judgment Entry, appears to find, in
part, that the jury’s decision that appellee violated the non-compete provision in the
Asset Purchase Agreement was against the manifest weight of the evidence. The trial
court, in its Entry, stated that “[t]he evidence at trial could be interpreted to indicate that
[appellant] closed his business before [appellee] picked up the slack which indeed was
the testimony of [appellee]. [Appellant’s] ability to do quality cabinetry was alluded to by
[appellant] but was not fully substantiated by the evidence.” The trial court further held
that “[i]t is this Court’s Opinion that a reasonable jury could just as well have found that
[appellee] got back into cabinet-making at the request of former customers who were
not being served by [appellant]., i.e. he was either out of business or unable to do the
work.”
{¶32} However, we find that the jury’s decision that appellee violated the non-
compete provision was supported by competent, credible evidence and that the trial
court erred in granting a new trial, under either Civ.R. 59(A)(6) or (7), on such basis. At
the trial in this matter, appellee testified that after the closing, he began doing business
as Julius Homes, LLC. In representing himself, he conceded that he competed with
Richland County, Case No. 13CA53 9
appellant and indicated that he did so because his former customers where not being
taken care of by appellant. Appellee stated that he went back to building cabinets
around April of 2008. Appellee, in his brief, contends that at the time he started doing
so, Stonybrook had ceased operations and that, therefore, he did not violate the non-
compete provision.
{¶33} However, at the trial, appellant testified that he was engaged in cabinet
making until he closed his business in March of 2009. Appellant testified that, in
November of 2007, the Articles of Incorporation for Unique Granite were filed.
According to appellant, during the beginning of 2008, Stonybrook and Unique were
combined into one company. While appellant ceased doing business in February of
2008 as Stonybrook Cabinet Company, he testified that they continued doing business
under Unique Granite and Custom Cabinets and continued building cabinets. An
insurance policy for Unique Granite, that was admitted as an exhibit and covered the
period from October 27, 2008 through October 27, 2009, described the business as
including cabinet making. In addition, employee payroll records from the period from
December 28, 2008 through March 6, 2009 for Unique Granite were admitted as
exhibits. Appellant testified that, during such time, they were building cabinets.
Furthermore, Unique Granite’s bank statements for the periods from January 1, 2008
through April of 2009 were admitted as exhibits as were tax returns for Stonybrook for
2008 and Unique Granite for 2008 and 2009. Appellant testified that, during such time
period, he was in business and was making cabinets.
{¶34} At the trial, Eric Swainhart, the owner of Liberty Cabinet Components who
was called as a witness by appellee, testified that he did work for appellee’s company
Richland County, Case No. 13CA53 10
and also for appellant’s company in May or June of 2008. He further testified that he did
work for appellee in June and July of 2008. Swainhart testified that, in June of 2008, he
did work involving cabinets for Unique Granite and that he hired appellant to do some
cabinetry work for him in the fall of 2008 on a Victoria’s Secret job. He further testified
that he told appellee that he was doing work for Unique Granite at that point and that
“[e]veryone involved knew exactly what was going on…” Trial Transcript at 146.
Swainhart testified that, throughout 2008, appellee knew that he was working for
appellant’s company.
{¶35} Ty Pritchett, a former employee of appellant’s who was employed at
appellant’s cabinet making business until around February of 2008, testified that he kept
in touch with appellant after he left and that appellant was still conducting business until
September or October of 2008. He testified that, in February of 2008, the shop was
“[r]unning as usual” and that ”[e]verything was working.” Trial Transcript at 149. He
further testified that cabinets were being made and that, when he visited the shop after
he left his employment there, he did not notice anything unusual.
{¶36} Based on the foregoing, we find that there was substantial credible
evidence supporting the jury’s verdict that appellee violated the non-compete
agreement with appellant, who was the buyer of appellee’s business. The trial court, in
its Judgment Entry, clearly indicated that it had a difference of opinion with the jury.
However, a trial court may not set aside a jury verdict upon the weight of the evidence
based upon a mere difference of opinion with the jury; doing so constitutes an abuse of
discretion by the trial court
Richland County, Case No. 13CA53 11
{¶37} Appellant also argues that the trial court erred in granting a new trial on
the basis that the award of $300,000.00 in damages was excessive or too large.
{¶38} As is stated above, appellee also asked for a new trial pursuant to Civ.R.
59(A)(4). Such section provides that a new trial may be granted on the following
grounds: “(4) Excessive or inadequate damages, appearing to have been given under
the influence of passion or prejudice.” The trial court, in its Judgment Entry, appeared to
find that the damages awarded were excessive and/or against the manifest weight of
the evidence.
{¶39} An appellate court reviewing whether a trial court abused its discretion in
ruling on a motion for a new trial pursuant to Civ.R. 59(A)(4) must consider (1) the
amount of the verdict, and (2) whether the jury considered improper evidence, improper
argument by counsel, or other inappropriate conduct which had an influence on the jury.
Dillon v. Bundy, 72 Ohio App.3d 767, 774, 596 N.E.2d 500 (10th Dist. 1991). To support
a finding of passion or prejudice, it must be demonstrated that the jury's assessment of
the damages was so overwhelmingly disproportionate as to shock reasonable
sensibilities. Jeanne v. Hawkes Hosp. of Mt. Carmel, 74 Ohio App.3d 246, 257, 598
N.E.2d 1174, 1181 (10th Dist. 1991). The mere size of the verdict is insufficient to
establish proof of passion or prejudice. Jeanne, 74 Ohio App.3d at 257.
{¶40} In Ohio, it has long been held that the assessment of damages is so
thoroughly within the province of the jury that a reviewing court is not at liberty to disturb
the jury's assessment absent an affirmative finding of passion and prejudice or a finding
that the award is manifestly excessive.” Moskovitz v. Mt. Sinai Med. Ctr., 69 Ohio St.3d
638, 655, 635 N.E.2d 331 (1994).
Richland County, Case No. 13CA53 12
{¶41} The trial court, in this matter did not make an affirmative finding of passion
or prejudice or that the award was manifestly excessive. Rather the trial court, in its
Judgment Entry, stated that the jury awarded damages in the amount of $300,000.00
“with little evidence to justify the figure”. The trial court, therefore, appears to have
relied on Civ.R. 59(A)(6) which concerns the weight of the evidence. The trial court
further stated, in relevant part, as follows: “The jury apparently observed that [appellee]
had deposited a substantial sum in his banking account and assumed that [appellant]
would have garnered a like sum had he elected to remain in business sans competition
from [appellee]. There was no evidence what the costs of doing business were or would
have been by either party…There was no evidence to indicate the actual profits
[appellee] gained from cabinet-making during the time in question.”
{¶42} The jury, in this matter, appears to have awarded appellant $300,000.00
on the basis that, because his business failed, appellant had to pay $300.000.00 in
bank loans that he had personally guaranteed. Of this amount, $200,000.00 was for the
initial loan to purchase appellee’s business and $100,000.00 was a line of credit taken
out for the company. Appellant contends that he was forced to pay such amount after
he was forced out of business by appellee’s competition.
{¶43} However, during his testimony at trial, appellant indicated that business
dried up because of competition and that Stonybrook ceased operations in February of
2008 because it was unprofitable the way that it was being run. He further testified that
he had disagreements with Ron Manco about how the business was being run.
Appellant testified that Stonybrook was closed because “we had people like you
[appellee] competing directly against us when you weren’t supposed to be.” Trial
Richland County, Case No. 13CA53 13
Transcript at 68-69. While there is evidence that appellant suffered damages as a
result of appellee’s competition, there is a dearth of evidence that appellant was forced
to close solely because of appellee’s competition and, as a result, suffered $300,000.00
in damages. We find, on such basis, that the trial court did not err in granting a new
trial with respect to the amount of damages. The trial court’s decision was not arbitrary,
unconscionable or unreasonable.
Richland County, Case No. 13CA53 14
{¶44} Based on the foregoing, appellant’s first and second assignments of error
are overruled and appellant’s third assignment of error is sustained.
{¶45} Accordingly, the judgment of the Richland County Court of Common Pleas
is affirmed in part and reversed in part. This matter is remanded to the trial court for a
new trial on the issue of damages sustained by appellant as a result of appellee’s
breach.
By: Baldwin, J.
Wise, P.J. and
Delaney, J. concur.